Bluster on BBB

by Boo Chanco (The Philippine Star), 14 Feb 2020

I have been writing on the slow implementation of Build Build Build projects. Some may think I am too pessimistic amidst the glowing reports of Cabinet secretaries responsible for rolling out the projects.

I just came across an academic paper that more or less shares my conclusions. Dr Epictetus Patalinghug, a professor emeritus at the University of the Philippines wrote a paper that wonders if BBB is too much and too fast.

Dr Patalinghug points out that BBB may have been too ambitious given constraints in human capital, technical, institutional, and funding.

“The presence of limited absorptive capacity in countries implementing scaling-up infrastructure program is generally taken for granted by policymakers.”

There is the other danger that “government bureaucrats may not have the capacity to select projects with high expected rates of return – meaning that ‘white elephant’ projects may squeeze into the government’s selection procedure.” (I am thinking Subic Clark Railway).

However, Dr Patalinghug pointed out, “Philippine policymakers have recently acknowledged remaining institutional weaknesses such as poor planning and project preparation, procurement difficulties, and bottlenecks in program or project implementation…

“The measured underspending from 2010-2014 was explained as due to weaknesses within implementing agencies with respect to program/project design, procurement, and execution…”

Dr Patalinghug personally visited the project sites and here are some of his observations, edited to fit my available column space.

The implementation status of selected BBB projects, Dr Patalinghug observed, “clearly shows the disconnect between the date of ceremonial groundbreaking and actual implementation.”

Of the seven major projects, only one (Clark International Airport Terminal) was implemented right after the date of the groundbreaking.

“The P2.8 billion design and build contract for the DOTr portion of the LRT1-MRT3-MRT7 Common Station was just signed on Feb. 13, 2019. The Ayala-MPIC portion started construction on May 7, 2018.

“Consider the case of the Metro Manila Subway. DOTr announces that diggings will start in fourth quarter of 2019 or first quarter of 2020. Yet, it has announced that completion of the first three stations (Mindanao Avenue, North Avenue, and Tandang Sora) will be on the fourth quarter of 2021. Given the implementation efficiency of the BBB Program, delayed execution guarantees delayed completion.

“As regard to the LRT1 Cavite Extension Project, construction on any part of the railway extension alignment has not started, despite its ceremonial groundbreaking on May 4, 2017. But construction for the depot at Pasay City and at Zapote, Las Pinas City has started.

“There is no observed progress as yet on the Malolos-Clark Railway and the Subic-Clark Railway projects.

“The first phase of the Mindanao Railway Project (Tagum-Davao-Digos segment) is likewise delayed. The NEDA Board’s ICC approved on July 10, 2019 cost increase for this project from P35.9 billion to P82.9 billion. The cost increase is due to a change in scope (at this late stage of the planning cycle) from diesel-powered trains running on a single track to a double track railway system with electric cars and standard gauge.

“The next process is the final approval of the NEDA Board and then finalization of the financing arrangement before groundbreaking and eventual construction. This project is an illustration of a project analysis that is not done appropriately.”

Here is the rundown on major DPWH projects: “Six DPWH-implemented BBB projects… What they have in common is its delayed implementation. Initially some of them were slowed by right-of-way (ROW) acquisition problems. However, low construction productivity characterizes most on-going projects.

“Consider the case of the Metro Manila Skyway Stage 3 project (from Buendia Avenue, Makati City to Northern Luzon Expressway, Quezon City). The project started in April 2014 with four segments: (1) Buendia to Plaza Dilao, (2) Plaza Dilao to Aurora Boulevard, (3) Aurora Boulevard to Quezon Avenue, and (4) Quezon Avenue to Balintawak, which is now modified to: Quezon Avenue to North Luzon Expressway). Each segment was targeted to be completed no later than April 2017.

“The Buendia-Plaza Dilao segment was targeted to be completed on April 2016, and was partially opened to traffic on July 22, 2019, despite lack of exit ramp on the intersection of Quirino Avenue and Osmeña Highway. Later on, this segment was closed to traffic on peak hours.

“The previous attempt to open a portion from Buendia Avenue to Java Street in July 2018 failed because it created more traffic by using the entry ramp as an exit ramp.

“But why does it take more than five years to complete a 3.75-kilometer skyway in a portion where there are no major construction obstacles to overcome, except the initial ROW problem on the Quirino Avenue area as well as the relocation of drainage systems and National Power Corporation transmission lines?

“The most surprising delayed project is the last 10 kilometer portion of the Tarlac-Pangasinan-La Union Expressway (TPLEX), the Pozorrubio, Pangasinan to Rosario, La Union section.

“After solving the ROW problem in this segment, construction pace slowed down dramatically.

“Lastly, the groundbreaking of the Southern Luzon Expressway Toll Road 4 (66.74 kilometer project from Sto. Tomas, Batangas to Lucena, Quezon) has its seventh groundbreaking held on March 26, 2019.”

We will cover the unsolicited airport projects in a future column due to space limitations.

Let me now share some of Dr Patalinghug’s conclusions.

“The Build Build Build program should not be perceived simply as increased infrastructure spending. The availability of financial resources for infrastructure projects does not automatically solve the lack of absorptive capacity and the presence of institutional weaknesses.

“The presence of absorptive capacity constraints has created implementation bottlenecks in the BBB program and has reduced the success rate and impact of individual projects, limiting its aggregate employment and output effects.

“Despite institutional weaknesses in the project selection, evaluation, and prioritization process, NEDA and the implementing agencies have not sought the assistance of external organizations (e.g., research institute or academic institution) in undertaking timely and rigorous project appraisals…

“In addition, the evaluation of large projects requires an independent expert opinion.

“Given the current pace of project implementation, most of the BBB projects will be completed beyond 2022. The next administration will experience several ribbon-cutting ceremonies, as much as the current administration has experienced several ribbon-cutting ceremonies on projects initiated by the previous administration.”